Serious Worries About Locking Up Synthetic Biology Through Patents

from the be-afraid dept

One of the most interesting parts of Eric Schiff's (now hard to find) book Industrialization without National Patents is his discussion of the growth of the synthetic chemical industry in Switzerland -- specifically with regard to dyes. Specifically, Schiff notes "we can say with fairly good assurance that its start and initial expansion was, on balance, helped rather than hampered by the absence of a Swiss patent system." Specifically, many different startup dye companies showed up in Switzerland, and the country soon came to be a major player in the market for synthetic dyes. It was the lack of patent protection that helped build up this market -- and, yes, while it meant that many started by simply copying the inventions of others (some from abroad), the high level of competition drove innovation rapidly. Specifically, Schiff quotes reports from the era that talk about how those Swiss firms "invented and developed many important new processes."

Eventually, however, there was anger from the neighboring Germans -- specifically from a few giant firms, who hated competing against the nimbler Swiss competitors who were innovating at a pace the Germans couldn't keep up with. By this time, also some of the more successful Swiss firms realized that with patents, they too could start to block out any new upstarts, and slow down the pace of innovation, keeping monopoly rents for themselves. That resulted in a change to Swiss patent laws in the early 20th century, such that they started protecting chemical dye-making processes. It's worth noting that this actually helped diminish competition in Switzerland, concentrating power among a few giant firms -- including CIBA, who still exists today as a multi-national conglomerate.

However, the real innovation came prior to those patents, and following those patents, only a very few, very large, companies controlled nearly the entire market. I'm reminded of this story, thanks to one of our readers, who goes by the name "Another Mike," after he pointed me to a video debate by the Long Now Foundation concerning the challenges facing the coming synthetic biology market. The entire video is quite long, but in part nine, historian Jim Thomas talks about the early days of the synthetic chemistry industry, leaving out the part about the success in Switzerland, but focusing on the damaging results of the eventual monopoly and oligopoly in the hands of a few German firms.

He's now quite worried that the same sort of thing is likely to play out in the synthetic biology market -- where patents are being used to guarantee that only a few companies are able to do any actual innovating in this market, with fears about both how that could impact the market, and how it could lead to a dangerous amount of power in the hands of a single company.

And the concerns can go much further. In James Boyle's The Public Domain, he spends the second half of chapter 7 quite worried about efforts to lock up the basic building blocks of synthetic biology. As he notes, synthetic biology is quite similar in many ways to software -- and locking it up with patents would have the same disastrous implications as software patents currently do. Luckily, the early days of software did not involve patents, but the same cannot be said for synthetic biology. Boyle notes:

It would be as if, right at the beginning of the computer age, we had issued patents over formal logic in software -- not over a particular computer design, but over the idea of a computer or a binary circuit itself.

There are efforts underway, described both in the video linked to above, and in Boyle's book, to create more open information in the synthetic biology world -- but there are also numerous investors and companies rapidly trying to patent up every aspect they can. It's easy to pay attention to things most of us use every day -- like software patents. But we should be quite worried about what's happening in other important fields like synthetic biology as well. When the basic building blocks are being locked up by patents, there is much to be worried about.

Reader Comments

dyes

The real problem?

I don't think the answer to the patent problem is to do away with patents. Some patents are deserved. (I think the guy who invented the weed eater deserves royalties and sainthood, but my yard has a lot of weeds.) I think the problem started when we let people patent concepts or ideas instead of a physical object. Patenting a new innovation is supposed to give people an incentive to innovate. If I know that by working sixteen hour days for years while researching mouse behavior and producing a better mousetrap I will be rewarded by another company copying my mousetrap and selling it because they can produce it cheaper than I can, I will go home and watch Flintstones reruns. Patents that protect the work that goes in to research and development of an actual process or product is a good thing. Patenting the idea of a hovering portal for interstellar travel in the hopes that someday Carl Sagan's reincarnated host will produce one is what many companies engage in. I think if one of the requirements to obtain a patent was to actually produce a working example of the process or object, many of our problems would go away.

Re: The real problem?

I would say even your weed-eater reference does not go far enough. The idea of a weed-eater should not be patentable, but rather only a very specific design. If someone else can take the same idea, but design it so that it performs better, they should be allowed to.

Just a little too generous...

Much of the Swiss chemical industry made great leaps because foreigners moved to Switzerland to copy processes developed elsewhere. Swiss businessman Adelrich Benziger testified in 1882 to a Swiss Patent Congress that "Our industry evolved only by using foreign countries - if that is theft, all our entrepreneurs are thieves."

Looking at the "invention" of new chemicals in Switzerland, it happened a few times prior to the implementation of patents, but after a patent system was implemented investment in research exploded as did the development of new drugs - real new drugs, not "innovative" copies.

It was very informative to learn about the total world marketshare of the Swiss in the synthetic dye industry circa the early 1900's, as well as one of the key reasons why the Swiss dye industry lobbied against the introduction of patent laws.

Re: Re: Just a little too generous...

It was very informative to learn about the total world marketshare of the Swiss in the synthetic dye industry circa the early 1900's, as well as one of the key reasons why the Swiss dye industry lobbied against the introduction of patent laws.

Seems to support the same history found in the other book. Not sure what point you think you're proving.

Again, you both seem to be conveniently ignoring the fact that there was tremendous dye innovation within the Swiss industry. A study of the industry published in Reichesberg's Handwoerterbuch noted that the majority of the processes in question were developed locally, even if some of the initial work was based on techniques from abroad.

Also, there are other issues that are not covered in that chapter, such as further dynamics concerning trade agreements in negotiation between Switzerland and Germany that played into this... and the fact that German chemical manufacturers even paid Swiss companies to promise not to produce imitation dyes. So the idea that Swiss companies were mere copycats is simply untrue.

Re: Re: Re: Just a little too generous...

Did I say I was proving a point? Not at all. I was merely making a comment about a publication that Mr. Holder may find interesting.

Again, you both seem to be conveniently ignoring the fact that there was tremendous dye innovation within the Swiss industry.

I am not at all sure how I can be ignoring a fact when all I do is provide a link to a publication.

Schiff notes "we can say with fairly good assurance that its start and initial expansion was, on balance, helped rather than hampered by the absence of a Swiss patent system."

I have never read Mr. Schiff's book, so obviously I have no opinions regarding its contents. I note the above part of the article merely because the quote is so generalized and couched with qualifications (weasel words, if you will) that it really presents no definitive opinon the issue of "trade secrets v. patents".

Re: Just a little too generous...

Much of the Swiss chemical industry made great leaps because foreigners moved to Switzerland to copy processes developed elsewhere. Swiss businessman Adelrich Benziger testified in 1882 to a Swiss Patent Congress that "Our industry evolved only by using foreign countries - if that is theft, all our entrepreneurs are thieves."

I don't deny that the Swiss dye industry started by copying, but the rest of the point pretty much destroys your claim that patents are important for innovation. If you listen to conventional theory, where patents are necessary for innovation, then you would suggest that industry would NOT bother to invest in Switzerland, because any innovations would quickly be ripped off.

But, as you note, the exact opposite happened. Foreigners rushed INTO Switzerland, in some cases closing up shop elsewhere. And, that made the synthetic dye industry in Switzerland quite competitive. So, yes, even though the initial concepts may have been copied, the end result was a dynamic and highly innovative industry.

Looking at the "invention" of new chemicals in Switzerland, it happened a few times prior to the implementation of patents, but after a patent system was implemented investment in research exploded as did the development of new drugs - real new drugs, not "innovative" copies.

Not quite true, but it sounds good. It's worth pointing out a few different things concerning the Swiss experiment. After 1907 investment dollars did go towards R&D, but it was actually at the expense of innovation, rather than improving it. The vast competition in the industry shrunk, and a few small conglomerates emerged -- thus, slowing down the pace of innovation, by allowing them to block competition.

Furthermore, it's wrong to sugges (as you do) that there wasn't innovative chemical work in Switzerland pre-patents. There was a tremendous amount of it.

And, an even more interesting comparison is to look at the number of patent filings by Swiss inventors in other countries prior to and after the implementation of Swiss patent laws. If, as you claim, patent laws increased investment and innovation, it stands to reason that the number of patents filed by Swiss inventors in *other* countries (which did allow patents) should increase as well.

But it didn't.

In other words, the pace of invention remained basically the same. So, any more "R&D" that may have gone into efforts in Switzerland may actually have been wasted. Prior to this, they were churning out just as many new inventions... but for less money.

The implementation of the patent system, then, merely served to increase inefficiency in the market -- which is exactly what we would expect from a protectionist policy.

Re: Re: Just a little too generous...

Mike:

I have never claimed that "patents are necessary for innovation." Indeed, considering your definition of innovation, patents are virtually irrelevant to innovation (I do not agree with your definition of innovation, but I would rather avoid trivial issues).

Foreigners rushed into Switzerland because patents prevented them from copying processes in their home countries, so they moved to some place where they could copy. It is quite humorous that as long as they were taking (or, as some people prefer, copying) the ideas of others that they were quite happy that Switzerland did not have a patent system. But once the industry began to be inventive (as in creating something new that had been previously unknown), rather than innovative (putting the old something in a shiny new box), they suddenly discovered that tit for tat was less than pleasant, and the copiers realized that without patent protection their brilliant INVENTIONS would be copied.

Sure, moving to Switzerland allowed them to be innovative (read, they could copy what someone else did and possibly figure out how to make it cheaper). But once they realized that innovation would only take them so far, they started to INVENT to feed their innovation (as opposed to copying the inventions of others) and patents suddenly looked a lot more interesting.

Re: Re: Re: Just a little too generous...

But once the industry began to be inventive (as in creating something new that had been previously unknown), rather than innovative (putting the old something in a shiny new box), they suddenly discovered that tit for tat was less than pleasant, and the copiers realized that without patent protection their brilliant INVENTIONS would be copied.

Actually, that's not true. The dye companies fought vehemently against adding patents in Switzerland. They opposed it from the very beginning, and were only forced to do so after the gov't got tremendous pressure from Germany as part of a wider trade agreement.

And, Swiss innovation in the dye space was quite high for 30 years before patents were put in place. So to claim that once they started doing something new they wanted patents is untrue.

Sure, moving to Switzerland allowed them to be innovative (read, they could copy what someone else did and possibly figure out how to make it cheaper). But once they realized that innovation would only take them so far, they started to INVENT to feed their innovation (as opposed to copying the inventions of others) and patents suddenly looked a lot more interesting.

be careful what you wish for

while i appreciate and agree with your economic analysis i would like to point out a major difference between software and synthetic biology is that innovation in the former has little or no chance of wiping out humanity/all_life_on_earth and that it may well be that putting the brakes on this kind of innovation may be in our collective best interest.

Patents in synthetic biotech

To me, the real danger is in the extreme positions being taken. Yes, the patent system is in a state of disrepair, and is likely doing more harm than good now (I ascribe this to the purchase of Congress by big business via "campaign funds"), but there are actually a multiplicity of reasons, though they all go back to the indiscriminate worship of big business.
There is a place for IP protection - there also needs to be limits on it - it is the limits we are presently lacking.
An extremist attitude in either direction is not helpful.

Corrections to History

I am in error regarding changes to Swiss patent laws; you are correct that Swiss chemical companies originally opposed the changes.

Some historical facts:

- Switzerland enacted its first patent laws in 1801, which were abolished in 1803, replaced with a variety of laws by individual Cantons.

- Quite a few attempts to create nationwide patent laws occurred, beginning in 1849. Not one of the numerous attempts to pass national patent laws was initiated from outside Switzerland.

- The first copied dye produced in Switzerland was in 1859. Swiss dye industry flourished, initially with copied processes, later with process improvements of their own.

- Germany was getting beaten in the world market, even with the benefit of copying others; Germany was not the low cost producer, even without patents. Germany finally decided to implement a patent system in 1877.

- Representatives from the Swiss chemical industry routinely referred to themselves as "thieves," "copiers," and "imitators" in a variety of forums, according to various official documents, beginning in 1882.

- Switzerland modified its Constitution in 1887 by national referendum and passed its first national patent law in 1888, but only because the patent law excluded chemical products, which the chemical industry opposed.

- Swiss companies were active users of other countries patent systems beginning in the late 1880s (approximately 20 years before the first patent law protecting chemical processes in Switzerland), protecting their chemicals and processes in other countries, restricting competition in those countries, even though they opposed patents for similar processes in their home country.

- German chemical industry's domestic market share rose from 70% in 1880 to 90% in 1900.

- The Swiss people voted by referendum to modify their constitution to eliminate the requirement for a model, which effectively permitted chemical processes. The law was modified in 1907 to include chemical processes. While Germany put pressure on Switzerland to change their patent system, it is important to note that the people of Switzerland needed to modify their constitution by a majority, so pressure on the government alone was insufficient.

- Germany is the king of chemical exports in 1913 with a world market share of 40%. Switzerland's share is less than 10%.

- Switzerland chemical companies join cartels from 1918 to 1951, at times with Germany and France. The cartels capitalized on patents issued in various European countries. The cartel agreement with IG Farben (a German cartel that had joined with a Swiss and French cartel) was nullified in 1939. The final Swiss cartel broke up in 1951 because of concerns regarding U.S. antitrust legislation.

- The Swiss modified their patent law in 1977 to include substances.

- Swiss chemical exports grow from about 19% of all exports in 1980 to about 34% of all exports in 2006.

- In 2007, Switzerland has the most patents per capita of any country in the world.

In summary, the Swiss chemical industry routinely copied and imitated other countries prior to implementation of their own patent system. After Swiss companies began becoming inventive in the 1880's, they routinely patents in foreign countries and formed cartels with other companies to limit competition. Once patent protection was granted for substances, the Swiss chemical industry exploded in importance and its share of the Swiss export market nearly doubled.